Has recovered some of its earlier losses today. Giving extra impetus to the downside when it comes to the ftse 100. A little divergence when it comes to the bond market. , movingeeing treasuries in Different Directions today. We did see some fairly negative assessments coming out of the institutes and generating today. In germany today per it significant downgrading their expectation for German Growth next year from 1. 8 to 1. 1 . Not exactly a great day if you were long on european equities. Romaine hear things are not much better. Support, wene of spoke to that within the first 60 seconds of the open here. This is the kind of day were market technicians make their money. 28. 37, and a lot of that the client. A lot of the folks tied to the economy. Youre seeing a lot of the luxury names tapestry, tiffany bringing the market lower. A wild ride over the past six or seven days come up again today. You see folks sliding back into some safe havens. Not a huge rush, but significant enough where you want to keep an eye on that. Crude not giving any help. Soft Economic Data on the manufacturing side, soft adp numbers, and you had higher than expected inventories on the eia pushing crew down below 53 on the nymex. Those gains from the september 14 attack in saudi arabia. Cantor fitzgerald came up with a bold note last week saying short the dow transport. Right now, 2 . We were down 2. 5 yesterday. This is the biggest twoday decline we have seen going back to the december 24 massacre that we had. It is all about the airline. Came out with the number coming in. Coming in well below what a lot of the street was looking for, guy. Guy it is certainly turning out to be quite the afternoon in london and around europe. A Senior Investment strategist joins us. And philip from the London School of economics will be with us. Also with us. Not going to be with us, he is here. How much of the game changer was manufacturing . Surveyou look at the pmi , ism surveys for the u. S. , have one that comes from market and the other ism p they have been giving conflicting signals, so that is a dilemma that the markets are in right now. The market pmi from manufacturing improved in the latest month, but ps i went down. Mixedk we have these signals. It was without question a big negative surprise, but we are not throwing in the towel to say we are going for a much bigger slowdown then we have so far. Guy the data coming out of the europe is pretty grim right now, and the fact that the u. S. Is getting caught up and it confirms that europe will struggle to get out of the manufacturing recession it is in right now. The policy solutions being talked about do not seem to be gaining traction. How does europe in particular find its way out of the hole that it is in . Can it do it with Monetary Policy, or does it need more . I think Monetary Policy is reaching its limits in europe. Manufacturing has left christine she is set up nicely but she will have to convince the european government to launch fiscal stimulus. We are seeing the basis start to shift in that direction. There will still be a lot of do you think that draghi and lagarde are going to have the ammunition or simply the impetus to stem the tide of a lot of folks on a downward trend . Havethink when you negative Interest Rates across the euro zone then the scope for Monetary Policy to have an impact is greatly reduced, and that needs to be accompanied by fiscal action and there are two strains. One is the constraint of the fiscal rules, and the second and larger constraint is the existcal blockages that in berlin. The fact that germany is terrified about recession, youre seeing the head of the saying we need to talk about fiscal stimulus, even in germany, the debate is moving. We will see some movement, but whether it is enough is the big question. Hearingve also been talk about whether Central Banks can pull different levers here. You had that thought bubble out of japan over the weekend, and here in the u. S. There is talk that the fed should focus less on the actual benchmark and a little bit more on opening the Balance Sheet. What do you think about that . Think the likelihood of a cut in the u. S. Has risen over the last couple of days, with the disappointment in the data. Whether we get to the point that we have to restart qe, we are a long way from that. We do not expect a recession in the u. S. We look more at trend growth. The gdp forecast from the atlanta fed is around 1. 7, and the trend rate of growth is 1. 8. We have had a slowdown in growth. We had 3. 5 last year, we are down to around 2. So on the margin that is a big deceleration, but we think things will stabilize and nowhere near trend recession. Guy another risk the market faces is a hard deal brexit. Boris johnson, the british prime minister, speaking up in manchester earlier on, talking about the conservative party conference. He had this to say. Of whats be in no doubt the alternative is. The alternative is no deal. That is not what we want, and outcome we seek at all. But let me tell you, my friends, it is an outcome for which we are ready. Guy Boris Johnson this afternoon has written to jeanclaude juncker, laying out the irishh plan for plan, the backstop, as it is known. Is taken in dublin remains to be seen. We seem to be counting down to a very difficult period as we approach october 31. s take onphilippe this. This story from Boris Johnson is i am not going to seek an extension. The story from parliament is you have to seek an extension. The story from brussels is this probably does not go far enough. The story from dublin is this probably does not go far enough. Itlippe if definitely definitely does not go far enough. The integrity of the Single Market is a red flag for the e. U. They would require customs checks at or near the border. That would violate a commitment not to impose those in ireland. It is a nonstarter. The plan at the same time, the e. U. Does not want to be seen as responsible for calling off these negotiations and therefore will engage in the days leading up to the European Council on october 17. But if there is no basis for a deal, it becomes a legal game. In Boris Johnson bypass parliament to seek an extension . Will the e. U. Agree . I suspect an extension will happen. Then we have an election and the risk of course is that Boris Johnson might win, in which case we are back in no deal brexit territory. Guy how would you handicap the risk of a no deal brexit at the moment . I would say greater than 50 . Guy on that note, we will leave it. Our panelists will stay with us. Paribas,rris of bnp and philip mcgraw. We go to Abigail Doolittle. Take a look at the s p 500, down 1. 5 . Ism printf by that yesterday, a second month in contraction for the manufacturing sector. Lots of investors boosted by this, calling it an Inflection Point to the downside. It spread to the european section this morning. Its worst day since 2015. Not surprisingly, investors going to havens including bonds in the u. S. The yen is rallying. Investors moving out of stocks, into havens. As for the decline in the ftse 100, thats break it down by using the s p 500. We are seeing a sea of red. The worst sector, health care, down 3. 7 . As for the energy sector, the second worst year for the ftse 100. Take a look at ftse. Supply concerns, Economic Growth concerns continue to way. Oil again, down seven days in a row, the longest losing streak of the year. Not surprisingly, some of the biggest losers here and in europe are in the energy sector. Look at chevron. Space,metals and mining rio tinto. Apple, and highquality name that has been defended by so many analysts. All of this has done technical damage to the s p 500. If we take a quick look at a chart, the moving average gapping below. That is bearish. The momentum indicator going way down. We had an options trader yesterday speaking to the fact that some investors are within three0 weeks. That would be quite the correction if that happens. Romaine thanks, abigail parade from the markets to washington, lets look at what is going on on capitol hill. A path to yes is the words nancy used to get to a trade deal. They are holding a News Conference right now, she and adam schiff, talking about a wide range of issues. Most likely they will also talk about the impeachment inquiry. You can watch more on the bloomberg terminal. If you do not have that, keep watching this channel. This is bloomberg. smaine live from bloomberg headquarters in new york, i am romaine. Guy i am guy in london. Democratic president ial candidate Bernie Sanders is being treated for an artery blockage. He experienced chest discomfort last night at had two stents inserted. He is canceling Campaign Events until further notice. He is 78 years old. Mike pompeo has confirmed that he was on the phone call between President Trump and the ukrainian leader. That call is the basis of the house impeachment inquiry. In thephone call was , as secretary of state for a year and a half, i know precisely the american policy with respect to ukraine. It has been remarkably consistent, and we will continue to try to drive those set of outcomes. Pompeo did not comment on a white house summary of the call. President y says the asked the ukrainian president for help investigating joe biden. In august, retail sales fell by 23 . Sales of luxury goods were down by almost half. Much of that is due to a drop in the number of tourists, visits from Mainland China down 42 . Has won atrump sanction fight against jetliners. For the illegal government aid to airbus p the award is the largest in the wtos history. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am120 countries, courtney donohoe. This is bloomberg. Guy . Guy lets talk about the state of the South African economy. Former finance minister for the nation joins us now. Advisorso the economic thethe incoming chairman of just unveiled the economic plan may a little earlier than some had anticipated, but nevertheless, it is out there. It is a good one is it a good one . It is good in many respects. It also fosters discussion in the debate, which happened in the last couple of days, and thatly everybody realizes we have to move in a new direction. And break from the past. And focus on growth and job creation. It is a good thing to start that debate. Africa has to create entrylevel jobs for a lot of people. How does it do that . Does it have the right economic model to do that . Mcebisi it is very clear that we are in a typical middle income trap, and to compete with labor intensive we needf the economy to incentivize and promote laborintensive industry. There is a low skill problem. You have to look at low skill, laborintensive production and try to stimulate it through incentives and a number of measures in the immediate intervention. And you will actually improve your competitiveness. Romaine we talk about the low skill labor concentration. , to is the path to shift start to move some of those people out of low skills into more of the high skilled areas . What type of sectors are sort of right for that type of transition . Mcebisi the transition is mainly happening in the there are a lot of happening that there are a lot of things happening in the manufacturing sector, and the Industrial Revolution is taking advantage. That, no order to drive you need training outcomes. An areaorically that is that is problematic to date there there are huge measures that we have to implement in order to improve. I want to talk about the markets a little bit here. A lot of folks stateside are concerned about how the country is going to deal with the debt load there are there has been talk about bringing some of that to the government. To sense is that there is a o big to fail operation. What in your mind, can be done . Mcebisi to improve the Balance Sheet, there probably needs to this is a problem that everybody is suggesting. Levels ofare inefficiency with the community. To look at cuts around suppliers. Particularly coal suppliers, you have to increase also the Energy Component in a big way. Policies withlude power stations in the immediate future. Guy can i go back to what you set about technology and the need to train up a skills base in south africa . That is a very admirable longterm ideal. Mcebisi it is. Guy but in the near term, that is not what South African needs. You have got to create a middleclass, build a middle class. What thegot to create United States did in the 1950s, and that requires normally that requires huge amount of infrastructure spending, ill ding roads, all those kinds of things that we have seen in other economies. With the debt burdens that currently exist, there is not that capability. It is admirable to talk about teaching people tech and the Industrial Revolution, but is that what africa needs right now . Mcebisi it is part of the mix. Part of it might be stimulate production. Infrastructure spending and government. Government is already talking and thereting a fund will be an announcement soon about how that process is. Investment catalyzes private investment in the country that would go a long way to stimulate activity. Overall, catalyzing private Sector Investment where the Public Sector currently is dominant. Guy lets talk about global investment. Globalar, at the First Investment conference, i got the email a couple days ago for the next one that is going to happen. I was there for the last one. I have to be there for the next one. What is the Investment Case for those looking to invest in south africa. Why invest in south africa right now with all the problems at the moment. Where is the opportunity . Macroeconomic fundamentals still remain intact despite all the problems, and i. Hink we are likely to maintain part of the problem is rigorously trying to mend his debt levels across the system. There are measures that are being implemented to try to strengthen the privatepublic partnerships in the economy. Contacts are being built in different sectors. New instruments are being developed in the private sector to try to stimulate growth. There are opportunities on that front. Also, i think huge measures are taken to try to manage corruption. Leadership counts. It does count. Thank you very much indeed for coming to see us. Jonas, the incoming chairman of mtn. This is bloomberg. Wentwe have 20 minutes we are near session lows at the end of the close here in europe. The closes next. This is bloomberg. Guy 30 seconds until the end of regular trading in europe and it is a sea of red across europe. Right read. Equity markets bright red. Equity markets have had a tough session. Line, downway throughout the session. Stoxx 600 down 2. 58 . The trajectory has been down and on decent volume. Lets take a look at the major markets around europe. The ftse 100 is taking it hard today. Down 3. 12 . The pound has rallied this afternoon, which may account for some of the losses we have seen. Oil stocks taking a big chunk out of the market. The cac 40 down 2. 9 . It has been a steady progression of negative news for the European Equity markets throughout the day. The bond markets look different across the atlantic. Lets take a quick look at what we are seeing in terms of the sector breakdown. Every sector in europe is a negative territory. If we look at the winners versus the losers, many more stocks on the losers side of the ledger. Real estate is the best performing sector in europe, down 1. 63 . Travel and leisure down as well. ,elecoms and food and beverage some of the more defensive names doing better than the market. The bottom end looks like this. This is where the real pain is being felt. Construction is down. Oil and gas is down 3 . The cyclical traits down 3 . That is where the pain is for european markets. At a headline level, the indices are down a lot today. August was bad. This is just beginning to feel like this. Some of these losses are worse than we saw in august. They date back to 2016 in term of the magnitude of the losses. Romaine let me show you where the pain is being felt on the u. S. Side. The start of a red october. S p below the 2900 level. Wo big supports broken through a lot of folks paying attention to the 200 day moving average, that is at 2837. Right now a lot of weakness in materials and industrial companies. Gm, the automakers, all down. A lot of Transportation Companies down as well. ,n the short end of the curve 1. 48 is revealed on the two year treasury. The vix is up to 21 today. Not quite the proxy it used to be, but youre starting to see people move into that option space, starting to buy some of those stored those short dated options. Gold, we were down 100 from the high. We are now flirting with the 1500 level. A lot of people if we can flip the board, we can take a look at what is going on in technology. Microsoft, apple, all of the big tech names moving lower. This gives you some idea of the mentality investors have. 1. 8 for transports. We talked about some of those names like delta, like ups, 2. 4 on the dow jones transportation average. The biggest decline since the december selloff. Small caps outperforming. When you see 1 down, never good. The russell 2000 never reclaimed those highs. This has been the canary in the coal mine. This is the main etf that tracks the marijuana stocks, one of the biggest bubbles in the u. S. Down 60 from the high in september of 2018. A lot of folks barreling out. Bailing out. That story not showing any real strength when you look at the fundamentals. Guy lets get more on that wto story. Has given President Trump the green light to impose tariffs on a recor